A letter to shareholders lodged with the Australian Stock Exchange on Thursday morning by Mr Mullen said it was "important ... we continue to have competitive remuneration practices in place to attract and retain the talent required to deliver on our ambitious and market-leading strategy, especially if such talent is sourced from overseas, as is often necessarily the case".

He described the challenges facing the telecommunications company's earnings and share price due to market disruption, the rollout of the national broadband network (NBN), increased competition and the difficulties in charging higher prices for growing demands for data.

“We set what we believed was a demanding plan for our management team in the face of these challenges and even though many of these were met, we recognise that this has not translated into positive outcomes for our shareholders,” Mr Mullen wrote.

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“In recognition of this, the board applied discretion and reduced the Executive Variable Remuneration Plan (EVRP) outcomes by 30 per cent to balance recognising the achievements of the management team and your experience as shareholders.

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“With hindsight, we recognise we perhaps did not provide enough transparency around some of the metrics that we adopted to measure management performance and the reasons as to why these were chosen. For this we apologise."

He said the board was “deeply disappointed” shareholders had been critical of Telstra’s 2018 remuneration plan outcomes, but acknowledged the criticism.

Over the past two years, Telstra's shares have fallen 37.5 per cent compared with an 11 per cent rise for the broader market, while the telco cut its cherished dividend in February.

Mr Mullen said the targets for management would be set based on delivering "lasting value to shareholders despite the market environment", which could mean bonuses are paid "even at a time of a poorly performing share price".